Nippon Steel, JFE apply for Japanese govt 'green' funds

MySteel: Japan's two largest integrated steelmakers, Nippon Steel and JFE Steel, are among the companies applying for Japanese government funding made available through the country's new 'Green Transformation (GX) Promotion Act' to progress R&D for decarbonizing their operations.

The two mills were among many companies in the targeted sectors of iron and steel, chemicals, pulp and paper, and cement that had applied for investment support by the time applications closed on 28 October, according to Japanese sources.

The government is making available budgetary support beginning this fiscal year totalling some JPY 484 billion ($3.18 billion) over five years for companies in the four industries through the issuance of GX Economy Transition Bonds, as Mysteel Global has reported. How much the companies have sought is not known.

Nippon Steel applied jointly with Nippon Steel Stainless Steel (NSSC) for converting facilities in Nippon Steel's Kyushu Works in Yawata to a large-sized electric arc furnace (EAF), to expand the EAF in the Setouchi Works in Hirohata, and to restart an idled EAF at NSSC's Yamaguchi Works (Shunan Area), all in western Japan. The Shunan Works was formerly owned by Nisshin Steel, the carbon steelmaker Nippon Steel acquired in April 2020. Nippon Steel will also absorb NSSC in April next year, as reported.

Nippon Steel had started trial operations on its first domestic EAF at the Setouchi factory in June 2020 and aims to use the larger furnace to produce high-quality steel products such as electrical sheets. Mastering the many technical hurdles when operating large-sized EAFs will allow it to replace a blast furnace at one of its works by 2030, the company has said.

Meanwhile, JFE Steel has sought funds for the construction of a new large EAF to replace its No.2 blast furnace at the Kurashiki Area of its West Japan Works. It hopes to have the EAF operational during fiscal 2027, beginning April of that year.

The No.2 BF with an inner volume of 4,100 cu m was relined in 2003 and JFE usually relines its BFs after about 25 years of use. The No.2 BF would be due for another relining round 2028, but the company is hoping it will have the new EAF running smoothly by then so the BF can be stopped. Kurashiki currently hosts three BFs in total and produces about 8 million tonnes (mnt)/year of crude steel, as reported.

Yoshihisa Kitano, president of JFE Steel's parent company JFE Holdings, told Japanese media in June that JFE was developing high-efficiency melting technology and is building a test EAF that will be put into operation this fiscal year. The company maintains that the conversion from BFs to EAFs in Kurashiki would reduce carbon dioxide (CO2) emissions by 2.6 mnt/year.

Kitano said that the annual CO2 reduction from the conversion of one electric furnace in Kurashiki is equivalent to about 5% of the emissions in fiscal 2013, the base year, "and if decarbonized electricity supply sources can (also) be utilized, it can be a carbon-neutral process."

Kobe Steel, Japan's third largest integrated steelmaker after Nippon Steel and JFE Steel, is also considering the introduction of an EAF at its Kakogawa Works, also in western Japan, but its application for GX funding this time was apparently postponed.

Besides the support for the steel sector targeted at process conversion from BFs to EAFs, the GX fund also covers utility and transportation facilities such as raw materials, industry daily the Tekko Shimbun notes. The subsidy amount applied for is not more than one-third of the total capital investment, it adds.

Note: This article has been written in accordance with an article exchange agreement between MySteel Global and BigMint.